Stock market's rally since November not feeling any warmer

Weekly Review: MAAD, CPFL indicator analysis

Our point? Except for those investors very adept at picking market lows in the broad advance that began in March 2009, or groups of stocks that have done better than the major indexes, investors relying on investments geared to mirror action in the major indexes have not done well for nearly two years. That lack of performance might have something to do with deteriorating market volume, but we suspect it may ultimately have more to do with the fact that strength since March 2009 will prove to be no more than a massive retracement rally following the highs made in early 2000 and October 2007. Shrinking volume in an uptrend, whether on short or long-term cycles, usually means the same thing – investor interest is diminishing.

Daily S & P 500 with Cumulative Volume (CV)

daily, cumulative volume

Weekly S & P 500 with Cumulative Volume (CV)

weekly, cumulative, volume

A couple of weeks ago we pointed out the failure of Cumulative Volume (CV) using Monthly data since the March 2009 lows. And how the 2007-2009 bear market witnessed a huge spate of liquidation as that negative trend progressed into its end game. Simply put, and despite a strong recovery in equity prices since the early 2009 lows, the underpinnings of this bull trend are nowhere near the quality of market internals prior to the run into March 2000, or the bull trend that began in October 2002 and ended in October 2007.

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